Economic News

Moody's Upgrades Vietnam's Credit Ratings from B1 to Ba3

Moody’s Investors Service has recently upgraded the Government of Vietnam's long-term issuer and senior unsecured ratings to Ba3 from B1 and changed the outlook to stable from positive.

The upgrade to Ba3 is underpinned by strong growth potential, supported by increasingly efficient use of labour and capital in the economy. A long average maturity of government debt and a diminishing reliance on foreign-currency debt point to a stable and gradually moderating government debt burden. The upgrade also reflects improvements in the health of the banking sector that Moody’s expects to be maintained.

Moody's said, rising competitiveness and a further transition towards higher-value added industrial activity will support growth at high levels in the medium term. Moody’s projected Vietnam’s gross domestic product (GDP) growth at 6.4 per cent a year in 2018 - 2022.

Combining deficits and growth trends, Moody's expects that government debt will remain broadly stable around the current levels, at close to 52 per cent of GDP in 2017. The debt burden should gradually moderate after 2020. Moody's has also raised Vietnam's long-term foreign currency (FC) bond ceiling to Ba1 from Ba2 and its long-term FC deposit ceiling to B1 from B2.